Urban Company Ltd.

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By Nitin Negandhi

Urban Company Ltd.: Innovative ideas but unrelated diversification

Urban Company Ltd. (UCL) was incorporated in 2014 by three young first-generation entrepreneurs with an innovative idea of providing a wide range of household services such as cleaning, repairing, painting, plumbing, and body massage.

The company operates in more than 50 cities across India and has an international presence in the UAE, Singapore, and Saudi Arabia (through a joint venture). It has also diversified into water purifiers and electronic locks.

UCL faces stiff competition from both organized and unorganized players. The company turned profitable in 2024–2025, just before its IPO. However, it continues to have a low asset turnover ratio.

The company closed its financial services division after finding more efficient ways of funding its partners. Its diversification into unrelated areas such as trading of locks and water purifiers is likely to put pressure on resources. While the domestic services business is growing at a healthy rate, management focus appears to be on the international business, which is growing at over 30%.

Going forward, UCL needs to expand operations across more Indian cities and consider diversifying into new lines of services to strengthen its growth momentum.

Grey market premium has nearly doubled in a very short span. However, investors should consider the following factors before investing:

1. Low post-issue promoter stake

2. Low asset turnover ratio

3. Unrelated diversification and risk of bad debts in new business

4. Low-cost holding of promoters and existing investor

The company turned profitable just before the IPO. Conservative investors may prefer to wait whether the reversal in this profitability trend shall be maintained or not.

Financials:                                                         (Rs. in crore)

Disclaimer: 

The writer is not a SEBI registered analyst. He and his friends and relatives may or may not participate in the IPO. Investors should consult their financial advisor before investing.  Grey market premium is just an indicator and should not be relied upon.